Weekly forecast: gold, oil, cryptocurrencies – Forex
Gold prices did not change much at the end of last week. The metal was trading in the range of about 1490 USD. The asset rate failed to gain a foothold above the key level of $1,500. The high chances of signing an agreement between the EU and the UK reduce tension and limit the recovery of gold prices.
The International Monetary Fund last week published a new forecast for the global economy. The IMF report expects global growth to be 3% this year. Recall that in April the fund predicted 3.3%. The new figure is the lowest since the global crisis of 2008-2009. Next year, the fund expects growth of 3.4%. This figure is also lower than the April forecast. The IMF believes that increasing trade and political tensions increases the risks of future international cooperation. This has a detrimental effect on business confidence, trade and investment decisions.
The efforts of central banks and governments aimed at stimulating growth look unconvincing against this background. JPMorgan’s global purchasing managers’ index shows a decline in output, pointing to a slight increase in the services sector. Ifo’s business climate is close to its lowest level since the global crisis of 2008-2009. It shows that the German economy, which is heavily dependent on exports, is on the verge of recession. In China, the data of the production PMI remain below 50. This is a clear sign of the fall of the industrial sector.
The drop in the dynamics of the increase in the value of the metal in recent months has not led to a decrease in the inflow of gold ETFs. There is a reverse process. Experts believe the reason is to maintain concerns about the prospects of the stock market and the global economy as a whole. ETF stocks have reached a record 2,800 tonnes this year. They exceeded the previous record, which was recorded in 2012. Then gold quotes were at 1700 USD. Central banks, which achieved a 50-year high in purchases last year, are able to increase them even further before the end of 2019.
Given the global risks, the likelihood that demand for the metal will be maintained remains high. Many market players are likely to continue to invest in gold during the crisis. The increase in the amount of funds in gold ETFs will continue due to the slowdown in the global economy.
We forecast that in the coming week the growth of gold quotes will be focused on the following resistance levels: 1492, 1495, 1500 and 1505 USD.
WTI quotes decreased slightly at the end of last week. They reached the level of 53.75 USD. The key factor in the decline in oil remains the expectation of a drop in world demand caused by the slowdown of the world economy. Poor statistics from America and an increase in commercial oil inventories contributed to the beginning of a new round of falling quotes after their recovery a week earlier.
China published data on GDP growth in the third quarter. The Chinese economy grew by 6% compared to last year’s figure. It is noted that this is the worst result in the last twenty-seven years. The result was lower than the forecast of 6.1%. China is the largest importer of oil, so the decline in production negatively affects the world demand for raw materials.
In September, the volume of refining companies in China increased by 9.4% compared to last year. They amounted to 56.49 million tons. The volume increased as a result of the work of new refineries and the return to operation of several plants after maintenance. The current level of demand from China remains high. Analysts’ fears concern about a possible decline in the future.
According to the American Petroleum Institute, commodity stocks rose by 10.5 million barrels last week. The increase was 2.2%. Analysts had expected the increase to reach only 4 million barrels. This had an impact on the decline in oil prices. U.S. inventories are rising for the fifth week in a row. This trend may continue in the coming months.
Alexander Novak, the head of the Russian Ministry of Energy, said last week that the states parties to the agreement to reduce oil production in September slightly exceeded their commitments. The main reason was the fall in production of raw materials in Saudi Arabia after the attacks on the country’s oil infrastructure.
Last week there was a meeting of the technical committee of OPEC experts. As a result, the cartel complied with the agreement in the first month of autumn by 236%. This is reported by Bloomberg. The data did not affect the market, as Saudi Arabia compensated for production disruptions due to its reserves. The total decline in production by other parties to the agreement was extremely low. The market should see a more significant drop in production in order for oil prices to recover.
Increased U.S. stockpiles and tensions over the conflict between China and the United States could have a more significant impact on oil prices in the near future. The British Prime Minister was forced to request a postponement from the EU regarding Brexit, which could cause a further decline in commodity prices earlier in the week.
We forecast that in the coming week WTI quotes will move to support levels: 53.50, 53.25, 53.00, 52.20 and 51.50 USD.
Digital assets were trading last week with small jumps in quotes. BTC fell to $8,200. ETH fell to $175. The value of XRP rose in price to $0.2915. The total capitalization of the digital coin market reached USD 222 billion.
The key event last week was the conflict between the U.S. Securities and Exchange Commission and Telegram. 11.10.2019 the agency has imposed a temporary ban on the distribution of Gram. Representatives of the Commission believe that these coins are securities, so they are subject to regulation on its part. The New York Court has scheduled a hearing in the case for 18-19 February next year. At the moment, the company is prohibited from selling or distributing Gram coins. It was also proposed to return 77% of the money invested to dissenting investors. At the same time, the defendants in the case do not believe that Gram is a securities. Telegram has asked the courts to lift the temporary ban on the distribution of cryptocurrency. Representatives of the firm believe that the Commission’s actions are contrary to common sense.
Investor interest in the Libra project remains high. Last week, the company’s board of directors was approved and its charter approved. Representatives of the firm said that about 1,500 organizations wishing to join the Libra Association meet the requirements of the organization, and may become partners. Giants such as eBay, Mastercard, Stripe, Visa, Mercado Pago and PayPal have recently withdrawn from the project. Cryptocurrency Libra continues to fall under harsh criticism from regulators.
FATF chief Xiangming Liu said the proliferation of such staples could lead to negative consequences in the area of money laundering and financing of terrorist organizations. He also stressed that the stebluns produced by his company would be subject to the standards of both fiant and digital money. Recently, the FATF introduced stricter rules for electronic currencies. The new requirements will be in force from the summer of 2020.
The Nasdaq Stock Exchange added the CIX100 index based on hundreds of cryptocurrencies. When creating a basket, this financial tool uses neural network algorithms and analyzes more than two hundred factors. According to the developers, complex analysis makes it possible to exclude assets with false volumes. CiX100 can include coins that were not in the TOP-200, at least for three months. The list of its assets will be reviewed every month.
We forecast that in the coming week BTC will reach support levels: 8,150, 8,100, 8,000, 7,900 and $7,700. ETH will move to 172, 170, 168, 165 and 160 USD, while Ripple will drop to 0.2900, 0.2875, 0.2800, 0.2750 and 0.2600 USD.